In an increasingly competitive economy, and recently impacted by the effects of the COVID-19 pandemic, companies need to be aware of different ways to stand out from their competitors, by becoming more productive and efficient (even at an adverse time).
In this context, technology is an important ally to bring agility to processes and projects in the various areas of the organization, by optimizing activities and reducing excess costs.
In the procurement department, this is no different, since there are different methods and solutions to improve the conduction of the stages in this area (supplier management, payments, acquisition of products and services, among others), which generates benefits such as:
- Follow-up of requests, with the identification of their status;
- Access to previous orders, allowing you to look at the history to make a more appropriate future purchase;
- Increased profitability, with greater integration of information from different areas of the company;
- Independence for suppliers, who can enter their information directly into the systems, which brings more transparency to the hiring process.
Given such important benefits, we have thoroughly researched and compiled a list of the ten best software for the purchasing department, recommended by specialized magazines and websites (such as Supply Chain Digital, Software Advise, GetApp and Gartner).
They may be useful to your company – check them out!
TOP 10: software for the purchasing department
1.SAP Ariba: first in the list of software for purchasing department developed by Supply Chain Digital (May 2020 edition), it offers a series of solutions for companies of different sizes, in the areas of supplier management, sales, services for buyers, among others. Through this software, companies can digitalize and simplify their expense management processes, end-to-end, in an integrated cloud platform.
2.Oracle: an important name in the technology sector, Oracle has a solution for the management of direct and indirect expenses and its different stages (contracting, purchase and payment). Its platform also facilitates the relationship with suppliers, through interaction and document sharing devices. There is also the possibility of training and certification for the use of this software on the company’s website.
3.IBM Procurement Services: one of the world’s leading technology organizations, IBM has been developing innovations in the field since 1911, the year it was founded. Its purchasing and strategic sourcing services offer digital solutions linked to the entire process with the use of technology, analysis, cognitive insights and Design Thinking methodologies.
4.Blue Yonder: the company (formerly known as JDA Software) delivers to its customers a platform for the complete optimization of business (planning, execution and delivery of demands; among them, those related to purchase). With the use of Artificial Intelligence and Machine Learning, it provides the benefit of having an optimized and autonomous platform for decision-making in companies.
5.GEP SMART: a unified purchasing software platform that enables improved efficiency and performance by offering solutions for spend analysis, savings tracking, contract and supplier management and accounts payable. In 2019, it received the award for “Best Purchasing Technology” in the World Procurement Awards.
6.A1 Tracker Software: Unlike other software for the purchasing department presented, this one is specialized in contract management, with numerous resources (approval of documents, suppliers, audits, among others). In addition, the contract panels and forms allow users to run analytical reports and update renewals, import and export data and prioritize activities.
7.Promena e-Sourcing: this software offers an efficient platform to monitor purchasing and supplier management activities. Users can maintain all online purchasing processes such as managing purchase requisitions, requesting quotations, approvals and delivery steps. In addition, there is a tool to monitor possible risks in the supply chain and integration with Enterprise Resource Planning (ERP) processes is supported.
8.Procurify: It composes the purchasing department software group aimed at medium-sized companies, and it is also used by financial sectors to manage spending. We highlight the usability and friendly interface, providing an option to track, control and analyze the values used by the company, thus facilitating purchase workflows and centralizing financial data.
9.Precoro: a spending and purchasing management software, helps reduce manual workflows and brings transparency to the purchasing process. Among its benefits, the following are highlighted: the ease of implementation of this software, performed in hours; the customization of its processes, meeting the different demands of customers; and the possibility of purchasing a free trial version.
10.ShippingEasy Software: Our latest purchasing department software tip is an inventory and shipping management solution suitable for small and medium-sized e-commerce companies. Key features include order tracking, label customization, integration with multiple vendor channels, rate comparison, and returns coordination. It is available for purchase with a monthly subscription.
As you can see, there are a number of software options for the purchasing department aimed at automating the processes of companies of various sizes and sectors, from the initial order to payment, thus improving the productivity of this important organizational area. It is necessary to analyze in depth the particular needs of your company so you can select the software that best meets your demands.
Follow Soluparts’ Blog to get up to date with relevant information related to the purchasing department – such as the contents of the articles we selected below:
Understanding how our brains work can simplify the way we negotiate or positively transform our interactions with other people.
The concept of the Triune Brain, developed in the 60’s, broadens our knowledge of this body, still so little understood, and offers the opportunity for development in the work environment, including for the purchasing professional – always involved in negotiations connected with several different interlocutors.
What is the Triune Brain, anyway?
The Triune Brain is a model formulated by neurosurgeon Paul D. MacLean based on the division of the human brain into three distinct regions, and organizing itself in a hierarchy based on its evolution. The regions are:
1. Primal or Reptilian Brain
As the name suggests, this brain part is also found in reptiles and controls the body’s vital functions, and is also responsible for our survival instincts. It warns us, for example, of our basic functions such as when we are hungry, cold, hot or thirsty.
Located in the brain stem, in the place where the spinal cord accesses the skull, the primitive (or inferior) brain governs our five primary feelings: anger, sadness, joy, disgust and surprise.
In a situation of danger the reptilian structure is awakened, releasing chemical substances to act instinctively, in defense of our self-preservation. When we lean our hand on a hot pot, for example, the automatic reaction is to push it away immediately – we act without thinking, something common when this brain is in charge.
But, besides primitive impulses, this brain is also related to habits and procedural memory, like getting into the car and starting to drive automatically, without having to think about every step that involves this action. The repetition leads to the recognition that the action is safe.
2. Limbic or Emotional Brain
Its location is exactly above the reptilian brain, that is, right in the middle of the Central Nervous System. The limbic (or middle) brain is the center of our emotions, memory and motivation.
By being activated it can raise the heart rate, increase oxygen consumption, preparing our body to fight or escape from some situation it perceives as dangerous. It can also trigger stress, one of the biggest problems faced in the workplace – whether at the office or working from home.
When we receive a disturbing message or see shocking news, for example, the limbic system is triggered, leading to an emotional experience before the occurrence.
3. Rational or Intelligent Brain
The intelligent brain is a younger cerebral part, constituted by the neocortex, and is responsible for all the conscious activities of superior order: language, reasoning, imagination, creativity, abstract thought, etc.
Located just behind the forehead, the rational (or superior) brain also concentrates a good part of our biographical and automatic memory – essential so that we can talk, write or calculate, among other actions. Responding to the perception of time and context, inhibition of inappropriate actions, generates understanding and empathy, and thus governs the way we conduct our interpersonal relationships and allows us to live in society.
That is, in any situation in which we use our reason the intelligent brain is activated, without involving other brain structures. A good example is when we face professional challenges, and seek the best solutions for each situation.
However, it is important to stress, the rational brain can go offline in threatening situations (real or imaginary), giving way to the limbic system, the first to respond when the goal is to maintain our security.
Triune Brain can improve purchasing negotiations
The concept of the Triune Brain can be used to improve the performance of the purchasing sector because, just as it is possible to develop essential skills for the professional to act in the digital age, it is also possible to better understand the functioning of this system to improve the work routine, as well as to obtain a better negotiation.
Well studied and applied, it can become a form of self-knowledge and be used to “map” better the people with whom we relate – in personal and professional life – even at the moment of negotiation.
As we have seen, our rational (or intelligent) brain is responsible for governing our behavior rationally, inhibiting the primitive impulses of our reptilian brain whenever they arise and prove inadequate.
If during a negotiation a primitive feeling arises, such as anger, for example, it is a sign that the reptilian brain is in command, giving flow to the irrational side.
It is worth remembering that we all carry emotional histories that can be unintentionally awakened by another person. Like the feeling of sadness or joy that comes to the surface, unconsciously, because of a gesture or perfume from someone present at the meeting – that is, many times the sensation awakened was not premeditated.
At such times the best way forward is to work on this sensation in a rational way, trying to understand why it has arisen and thinking about the harm it may offer if it is not mastered. And, of course, it must be replaced by a civilized and positive behavior, coming from the rational brain.
One way to achieve this effect is to go out for a drink of water or ask for the conversation to be postponed to another occasion – if it is possible to postpone – and especially to breathe deeply: this action better oxygenates the neocortex and helps it function.
In fact, it is always possible to make a choice: give in to the primitive impulses and desires of the reptilian brain or use the intelligent (or rational) brain to control them, and obtain the best results in personal and professional life, no matter how challenging the moment may be.
The three distinct brains, which emerged as we evolved and now coexist, do not operate independently: they influence each other. The balance between them will allow us to maintain harmonious relationships, regulate impulses and maintain the right behavior in the most varied situations – like the moment of an important negotiation in the purchasing department.
The concept of the Trine Brain comes to add to other information that can turn the game when negotiating – an essential task for the purchasing department. And exactly because it’s so important, we suggest reading our content on negotiation. Access and improve your techniques:
The concept of Compliance, already known in the corporate scenario, aims to adapt companies to legal and ethical rules that guarantee values such as transparency in business relations and procedures. It is also very effective to detect and treat possible frauds, deviations or non-conformities that may happen in the company.
But what about compliance in the purchasing department? What are its benefits? That is the subject of this article
Fraud in the purchasing sector
Among other responsibilities, it is up to the industry to judge the best proposals for the supply of materials, as well as to choose which suppliers will be hired.
By moving varying amounts of money, these negotiations can open up gaps for unofficial agreements – where the choice falls on the supplier that offers some kind of benefit. To investigate this scenario, Price Waterhouse Coopers (PWC) conducted a Global Survey on Economic Crimes – Brazil.
According to the study by the consulting and auditing services company, 44% of the companies that were victims of economic crimes in Brazil suffered fraud in the purchasing process. The survey also found that 69% of the victims detected fraud during the selection of the supplier, 63% in their hiring and 56% in the invitation to participate in bidding processes.
In addition, the survey pointed out the “opportunity” as the main factor to contribute to the criminal practice, since people who commit fraud usually know very well the existing regulations and know how to cheat them, which makes essential the existence of clear policies and training programs focused on ethics.
Continuing with the data, 64% of criminal attacks are committed by people who work in the company’s purchasing department. “When the fraudster is inside the company, his profile is balanced between middle management and team members, both slices with 39%. Members of the executive management account for only 17% of cases,” the survey found.
These data are ratified by Cláudio Marcelo Rodrigues Cordeiro, in his work “Internal and operational auditing: fundamentals, concepts and practical applications”, published in 2013. According to Cordeiro, fraud can occur when basic conditions such as intention, opportunity, insufficient internal control, weakness of an ethical policy associated with a weak code of conduct and risk inherent to the activity coexist.
Importance of Compliance in the Purchasing Department
The lack of compliance of the company’s performance both with the legislation and with its internal policies of good practices, regulations and codes of conduct may result in serious damages such as damage to the image of the company and its reputation in the market, compromise of the company’s results and, in more serious cases, criminal proceedings.
According to the author of the book “Compliance in Brazil: Consolidation and Perspectives (2008)”, Vanessa Alessi Manzi, four fundamental preventive and detective controls are required in a Compliance program:
- Establish a code of ethics for the organization;
- Develop professionals in the capacity to deal with ethical dilemmas;
- Create channels for identifying unethical conduct;
- Enabling the discussion of ethical dilemmas.
The author emphasizes that Compliance programs are not able to fully prevent illicit acts from occurring. However, risk management allows identifying, assessing, monitoring, recommending and reporting risks and combating them quickly.
Compliance in the purchasing department
Below are some practices that will help maintain compliance in the purchasing industry.
1- Creating a Compliance Program
The study by Price Waterhouse Coopers (PWC) pointed out that the most effective means of combating fraud is the prevention and mitigation of in-process risks and methods. In other words, the existence of a Compliance program in the purchasing department, establishing a code of conduct, training programs that involve ethical values and disseminate the established standards is essential. In addition to a channel for employees to report what they are seeing wrong, without having to identify themselves.
The main topics for creating a Compliance program in procurement are:
- Comply with existing laws, regulations and standards;
- Create a set of standards of conduct and ethical principles that are known to employees;
- Have clear and precise internal procedures and rules – to be obeyed by the entire team;
- Create reports that generate information and make the purchasing process transparent throughout the organization;
- Assist external and internal auditors offering all the items requested in an agile manner.
2- Frequent Audits
In addition to preventive controls and fraud detection, periodic audits are also a good tool within the Compliance culture in the purchasing department. These audits can:
- Avoid exchanging inappropriate favors or gifts between purchasing professionals and suppliers;
- Ensure proper control by preventing laws from being circumvented – even unconsciously;
- Verify that what is established in the contract is being duly fulfilled by the supplier;
- Observe if the business partners also follow compliance principles.
During the audit the entire acquisition process is evaluated. The user’s request (requirement, quantity and urgency), vendor selection, quotation, negotiation, order closing, physical receipt, storage. In addition to greater transparency, the audit allows improvement in the work of the sector.
3- Process standardization
This is a way to reduce loopholes for illicit acts that harm the company. Standardization will also allow the analysis of the strengths and weaknesses of the procurement process, identifying actions that lead to the continuous improvement of the Compliance process in the purchasing department – thus, the company will always be up to date with the changes that have occurred in the current legal norms.
The standardization of processes requires the structuring and documentation of activities in an archive that will be made available to the procurement team, who will be able to consult it in case they have any doubts or questions.
4- Partnership with suppliers who practice compliance
Make sure your suppliers meet specific ethical and transparency requirements and are qualified to maintain a business relationship with your organization. This verification process should be constant, also evaluating performance, and the supplier companies that prove more reliable should have priority in future negotiations.
This verification can be done with the monitoring of each of the suppliers in meetings, via social networks or verifying the mission and values of the company, for example.
The implementation of a Compliance program minimizes the possibility of illicit acts in the purchasing department and, in case of such occurrences, fights them more quickly.
In this process, good supplier management is essential. And the most practical way is to have a company specialized in spare parts.
Experienced in purchasing industrial materials – and with offices in Brazil, Germany, Portugal, Hong Kong and the United States – Soluparts has access to thousands of international products and suppliers.
Experience the advantages of having a team specialized in indirect purchases, by requesting a quotation right now!
Knowing the challenges and market trends is essential so that the purchasing department does not run the risk of becoming obsolete and losing value within the organizational structure.
In this post we will address these two aspects, that are essential for the industry to be in line with the major market changes resulting from Industry 4.0, by acting strategically and generating greater competitive advantage for the company.
We will also focus on the role of the purchasing team in this process, as well as the technologies that are already being used to make the industry and the supply chain more effective.
The Age of Post-Digital Transformation
Since the expansion of computing and the emergence of the Internet, we have experienced a real revolution in personal life and within organizations.
The adoption of technology has become essential for companies of all sizes and segments, changing the way they operate. According to IDC (International Data Corporation), companies have been investing more and more in technological resources – of course, each one of them is on a different level, due to the investment capacity and the understanding of the subject by their managers – and they closed the year 2019 with an investment of US$ 1.25 trillion in digital transformation.
But just investing in technology is not enough. According to experts, we have reached the age of Post-Digital Transformation, also known as the second wave of Industry 4.0.
In this phase, machines and human beings connected by advanced technologies such as 6 G Communication and Intelligent Automation have the chance to make production systems even more agile and efficient.
In other words, more will be required from managers than simply the implementation of technological solutions. It will take a skilled team to deal with all these resources, to plan their acquisition and to turn them into competitive differentials for the purchasing department and for the company itself.
Purchasing Challenges in Industry 4.0
The report, 2019 Key Issues Study, by the The Hackett Group, states that digital transformation is a critical goal for many purchasing departments. This is because, of the purchasing professionals interviewed, 90% believe that Industry 4.0 will change a lot the way the area works – but there is still a lot to be done for this change to reach the sector and generate the desired advantages.
Continuing the information from the study, the gap between companies that have already adopted digital transformation in their purchasing processes and those that have not will increase more and more.
As a result – and because managers will increasingly perceive the need and potential of the digital transformation for work efficiency in this area – by 2021, an increase in the adoption of new technologies in the purchasing department is expected.
Some of them are already being directed to the supply chain, helping in the planning and control of the purchasing process and resulting in benefits such as greater efficiency, lower costs and improved services.
By making use of modern elements such as RFID (Radio Frequency Identification), robots and process integration, many are the benefits of an intelligent supply chain, which can be implemented in any company.
Nevertheless, for Accenture the technology is still neglected or outdated in the purchasing sector. The consulting agency believes that as the digital transformation takes place in a structured way in the purchasing department, there will be an evolution in processes that are already automated – or partially automated.
This is because it is not enough to have technologies, but to integrate them into a more comprehensive strategy. By being able to gather information and process it – adopting tools such as analytics, artificial intelligence – the purchasing department will further improve its performance.
The Purchasing Manager in times of Industry 4.0
According to the recruitment consulting agency Michael Page, in 2019 the position of purchasing manager was one of the most sought after positions in middle and senior management in Brazilian companies, which shows the increasingly strategic role this professional has.
In general terms, companies seek people who, among other knowledge, master technology and use it to automate processes, minimize errors and, as a consequence, reduce costs and improve productivity.
Therefore, purchasing professionals need to have a good understand of the solutions available in the market, using them to obtain better results for companies, if they want to be seen differently.
Following this line, The Hackett Group study also investigated the role of purchasing executives, concluding that managers with the capacity to analyze the data offered by technological tools, using them to make more assertive decisions and to reduce costs, will have a seat at the companies’ strategy table.
It also concludes that the impact of advanced analyses on the purchasing department should triple by 2021, rising from 20% to 60%, which makes professionals who have this ability stand out – and those who do not, prepare themselves to acquire it.
The purchasing managers themselves agree with this data, since 4 out of every 5 executives in the area have pointed out the domain of analytical capacity and functional reports as extremely important for the development of their tasks.
This increase is fully justified, since previous HG surveys also found that analytically driven organizations have twice as much chance of improving their financial performance and five times as much chance of making quick, positive decisions.
Thus, analytical capacity and also critical analysis and creativity have become indispensable characteristics for 4.0 Purchasing professionals. The good news is that these essential skills of the Purchasing manager in the 4.0 industry can be developed – or enhanced – by following the tips of our experts.
And counting on these differentials is urgent. For The Hackett Group there will be an increase to 73% in the use of industry spending analysis, as well as from 16% to 35% in the use of Artificial Intelligence and Internet of Things (IoT).
For example, devices connected to IoT to track deliveries and help teams evaluate the performance of each vendor – in addition to IoT, other technologies are already changing global commerce and must be known by the professional who wants to keep pace with digital transformations.
Learn about 8 trends in the 4.0 Purchasing Department
We have researched the main publications – such as Gartner, The Hackett Group, Levvel Research and ProcuramentIQ – to compile a list of the main trends for the purchasing department in the coming years. And you can check the results down below!
1. The Purchasing Department generating value
One of the world’s most renowned consulting companies, Gartner, has produced a technical document entitled Procurement 2020: Your Action Plan to Prepare Now, which indicates a redesign in the purchasing department.
The document shows that, so far, the sector has mainly sought to reduce costs and risks. However, with the use of advanced technologies in procurement, an inevitable change will occur, making it possible to obtain information about the supply market, the organization’s purchasing behavior and the supplier’s performance.
With these insights it will be possible to leverage the perception over spending,the market and suppliers, which helps to identify new ways to generate value and puts the purchasing department on a much more strategic level within companies.
2. Purchasing consultants emerge
The role of purchasing managers will shift from “the simple expenditure control to strategic execution of purchasing functions that support the company’s financial and operational decisions, protect its results and mitigate the risk of the company’s competitive advantage,” says the Levvel Resarch report.
Instead of buyers, consultants with much more knowledge will emerge, leading to a transition within the industry, which will function as a center of excellence that is able to make the right decisions for the whole company.
3. Scarce talent in the sector
Experts from ProcurementIQ, a company that operates in the United States and Canada offering information on the purchasing area, believe that a major trend for the coming years will be the difficulty in finding talent to work in a more modern purchasing department, due to the incorporation of new technologies.
In addition to the change in profile, which requires more ingenious, creative and technologically savvy purchasing consultants, another factor that makes it difficult to attract qualified professionals to work in the 4.0 purchasing department is the false perception that careers in purchasing are uninteresting and that the job is more suited to experienced and mature people.
In this scenario, the sector risks having a staff with less than ideal qualifications, which increases the workload required to perform the job and generates more costs for the company.
One of the solutions to avoid this significant talent gap due to a shortage of qualified candidates is investing in internal development programs that is still currently very timid.
ProcurementIQ highlights that 75% of organizations spent less than 2% on training programs in 2019 and that companies will need to invest in order to attract and train professionals, without forgetting to retain the talent that is already part of the team, by creating an environment where they can feel stimulated to collaborate and grow, offering benefits that are interesting to people with this profile.
In this sense, it is worth highlighting two trends on the rise, both focused on professional training. These are the two trends:
- Upskilling: The ability to acquire new skills so that the employee can keep up to date in his/her role, as changes require new skills;
- Reskilling: The requalification or the achievement of new knowledge, allowing the collaborator to develop activities different from the one he was used to performing.
Both processes add training, which improves the performance of employees, raises the quality level of work and reduces the time to perform tasks – and, of course, avoids professional stagnation.
Finally, another important point – and one that deserves to be reinforced – is that professionals with analytical skills demand a higher remuneration. But, of course, this is a very positive investment for the company.
4. Need for greater digital protection
One of the biggest risks to the purchasing sector in the years to come, according to ProcurementIQ, is cybercrime, which is expected to generate losses of more than $5 trillion worldwide by 2020 alone. And unfortunately, the purchasing department is not immune to this problem.
The more digital solutions are incorporated into the industry, the greater the risks of vulnerabilities and attacks, which requires an effort to keep information secure.
In this context, it is recommended to follow the organization’s cyber-security protocols, by training and making the entire team aware of the need to comply with the standards.
Another important point is to be careful with vendor protection features, since most digital attacks in companies were the result of inadequate protection in third party environments, including vendors.
5. Better contract management
Contracts closed by the purchasing department are important documents, but in general, after they are signed, they are filed and forgotten.
The international marketing company, Aberdeen Group, asked purchasing managers how they managed the company’s contracts and the answers were surprising. Two-thirds said they no longer knew where the documents were, much less managed them.
One reason for the contract management process to be so disorganized is because 81% of organizations do not use any tools for this task. As a result, they face problems such as lack of consistency between contracts (53%) or supply chain discontinuity (36%).
Considering this, the trend is for companies to move their process and contract management to cloud computing. Built, stored and maintained in a centralized data repository, organizations can manage these documents, mitigating risk and reducing costs.
Automating contract management will provide organizations with a variety of facilities:
- All documents will be in a cloud database and can be accessed from anywhere by authorized users – even via a smartphone;
- Automated notifications, triggering alerts to highlight renewal dates and chances for renegotiation;
- Monitoring vendor performance, tracking delivery time, price fluctuations, whether agreed-upon terms are being met, etc.
6. Environmental and social responsibility on the rise
The number of large companies opting for partners who take nature care and social responsibility seriously is increasing each day.
And consumers are adopting the same criteria, no longer buying from organizations that do not show this same consideration for both topics or that have in their list of suppliers companies that harm the environment or, for example, exploit some group to have access to very cheap labor.
Therefore, one of the purchasing department’s trends is to make sure that its entire network of partners is made up of organizations that are trustworthy and committed to the environment and to building a fairer society.
7. Change in the relationship with suppliers
International trade is slowing down and one of the reasons is that technological evolution has leveled products and services, making it easier for consumers to find what they need in a place close to their location – we suggest reading the article How Slowbalisation affects the supply chain to learn more about the subject.
However, even with this significant change, the guarantee and reliability of supply remains one of the basic premises for the good performance of the purchasing department. In order to have greater security in procurement, strengthening the relationship with suppliers is an increasingly strong trend.
Create consistent communication channels, increase transparency in transactions. In return, the best prices and delivery times are expected.
8. Greater transparency in the purchasing department
Purchasing trend number 8 is having as much transparency as possible in the purchasing process.
And this can be achieved by following these steps:
- Define and implement policies for the sector;
- Monitor and document each phase of the procurement process;
- Manage a list of approved suppliers or hire a Trading Company;
- Establish purchasing contracts, archiving them appropriately to better manage them;
- Perform frequent audits;
- Use technological solutions to make the industry process more practical, agile, effective and… transparent!
Purchasing 4.0: facilitating processes
The purchasing process is complex and presents critical points:.
- Long or unclear requisition or approval procedures;
- Imprecision of data in orders;
- Part of the processes is still manual;
- Purchasing systems are not integrated;
- Outdated or inadequate technology.
It demands the ability to research, qualify and manage suppliers, as well as dealing with the pressure of getting the best possible deal and ensuring that the material arrives on time – even when the order is received in the purchasing department with little time to purchase or, worse, when the material is already out of stock.
For a more efficient industry, Business Intelligence (BI) is one of the great bets to help in the intelligent control of information. Founded in 1958 by the German Hans Peter Luhn, BI gained a new meaning in 1989 when Howard Dresner defined it as “a set of concepts and methods to improve decision making through data analysis systems.
In short, it is the collection and interpretation of large volumes of data in order to support decisions and organizational strategies. For that, BI uses technological solutions – Artificial Intelligence (AI) and Machine Learning are part of the options – to provide total visibility of the company.
With this 360o vision, the manager can identify expenditures, evaluate performance and detect risks, making more assertive and faster decisions.
Within the purchasing industry, BI can, for example, cross-reference a vendor’s data by category, geography, or seasonality. It can also identify problems such as delivery delays or product quality.
Purchasing Department: preparing for the future
Every day new things are being announced, which requires adaptation, but offers the possibility of a new way of acting. Much more practical, fast and efficient.
And since the pace of technological transformation will not slow down – quite the opposite, it will become more and more accelerated – professionals need to be attentive to follow this growth, using it as a strategic element in the development of the area and the organization.
They must also prepare themselves to share knowledge. Developing the potential of the entire purchasing team will allow the sector to gain a broader and more fundamental participation within the organizational structure.
In this article we seek to show how the purchasing department has been changing and offer tips that deserve to be analyzed to increase the sector’s visibility – among them, counting on experienced partners such as Soluparts.
We are specialized in the purchase and delivery of industrial materials, with offices in Brazil, Germany, Portugal, Hong Kong and the United States.
With our experienced team, we can find any product, regardless of brand, that your company needs. This is because we work with reliable suppliers in all segments, allowing us to decrease the number of registered suppliers and, as a consequence, also decreasing the risks of relating with several different manufacturers.
For more information, we suggest reading the article Benefits of a Trading Company for the purchasing department. It will show you how to improve the efficiency of your purchasing department.
Our goal is to make your purchasing process much more practical, agile and reliable, allowing you to have more time for the strategic issues that the purchasing department currently requires and that it will require more and more, as we’ve seen.
For more information about our performance, please contact us.
Opting to buy products in other countries through a Trading Company offers many advantages. We highlight the main ones below.
1. It optimizes the purchasing process and reduces costs
Acquiring the best products at the best price is essential for every company, but it is a task that demands time and effort from the purchasing department, especially for companies with high demands.
Trading companies optimize your time by enabling you to concentrate all your demands on just one company. No matter if the demand is for 1 or 300 items, trading companies receive your quotation and will do all the work to seek the best offer from international manufacturers and offer you the best commercial proposal.
2. It gives you access to the best suppliers in the world
Trading Companies – especially those with offices in the main world markets – ensure that any brand and product your company needs can be found under the best possible conditions – Soluparts can even search for materials considered obsolete. Here it is not only the quantity, but the quality of the selected suppliers that counts!
3. It Improves communication and raises the level of negotiation
Negotiating with suppliers can be a difficult process, especially when the language and culture of the place where the supplier is located is not mastered.
Trading companies relie on multicultural and experienced professionals who are able to negotiate in several languages. Another differential of these professionals is the high level of relationship with the manufacturers who are negotiating, guaranteeing the best prices and market conditions.
4. It allows you to buy smaller quantities and speeds up the receipt of purchased materials
A trading business allows you to buy any volume, which avoids the purchasing team to buy over the real need and formulate volumous stocks.
the purchase of parts in any volume, avoiding the purchase of products in excess of the real need and the formation of volumous stocks. This way, it keeps the purchasing department’s expenses within budget and avoids costs with deposit rental.
A Trading Company also allows:
- Spot purchase – made on time, according to the company’s needs;
- Purchase by contract – list of materials previously quoted and with extended quotation validity ( 2 to 3 years ). This modality turns the buyer into a contract manager, greatly reducing the volume of spot quotations and optimizing the purchase process.
5. It makes load consolidation a possibility
Relying on a trading company is essential to facilitate logistics, since it will gather different products, from different suppliers, in a single warehouse, offering a safe storage, while waiting for the purchasing company to arrange the removal of the materials.
The reception and consolidation of loads by a trading company guarantees total security in the process since all items are carefully checked in order to guarantee that, when they are exported, they are exactly the items needed by the client. Besides all this security, it also allows significant reduction of logistic costs through the reduction of international freight and customs costs.
Soluparts, a global trading company
Soluparts is able to offer quotations from the most relevant manufacturers in the world – read an article that shows our differentials and learn how we can optimize the routine of your purchasing department.
We are a supplier specialized in all types of industrial materials and have offices in Brazil, Germany, Portugal, Hong Kong and the United States.
For some time now, companies have been investing in creating a purchasing industry that uses resources such as automation technology and cloud computing for greater efficiency.
But has this area reached the level of maturity necessary to benefit from the transformation that is within the reach of purchasing in Industry 4.0? That’s what we’ll see next.
Digital maturity of the purchasing sector
In a recent study, Forrester Consult interviewed 417 purchasing leaders from North America and Europe to identify the degree of digital maturity in the area, noting that 65% of organizations said they were at an advanced stage in this regard.
However, the same survey showed that they are further away from a 4.0 Purchasing sector than they had imagined, with only 16% of companies at an advanced level of maturity – meaning they make intelligent use of the technological innovation available and are programmed to keep up with all the evolution that technological resources will bring in the coming years.
Another highlight of this study concerns the poor technological choices that companies have made. The result is that 82% of them have changed (or are thinking of changing) their digital provider, mainly due to the lack of integration between the implemented solutions (30%) and the difficulty of use of the tools by users (27%).
The conclusion of the researchers is that the vast majority of the companies interviewed still adopt a digital approach that simplifies processes and improves the efficiency of the purchasing sector, but this is not close to the transformation provided by Purchasing 4.0.
And the first step in this direction is up to the purchasing manager: to realistically assess the digital maturity in which the sector currently finds itself and, together with the Information Technology department, to outline the best strategy towards a planned and continuous transformation journey that will provide real competitive advantage for the company.
Organizations that do not adopt a smart approach to purchasing will risk losing space to the competition with digital knowledge, since the current business environment is one of extremely rapid change.
The Purchasing Team in Industry 4.0
Purchasing managers are still reticent about implementing new technologies, such as Artificial Intelligence, Robotic Automation or Blockchain in the industry routine.
This is the conclusion of a survey conducted by Deloitte – an American business consulting firm based in several countries around the world, including Brazil – pointing out that 51% of the managers interviewed are hesitant because they understand that their teams do not yet have enough resources to execute a digital purchasing strategy.
It is clear, therefore, that Purchasing 4.0 managers need to find new talent and also prepare the employees already hired, forming a multifunctional team with training to face the digital transformation.
Another essential factor to obtain the best possible performance from the purchasing team is to establish metrics that make it possible to evaluate all the collective and individual work. This analysis will allow us to know the team’s weak and strong points, investing in improvement actions.
And, of course, we must not forget that the purchasing manager himself must adapt to the new times, acquiring fundamental skills for the digital era.
Using modern tools correctly, the area will be able to capture, analyze and act from updated data in real time, creating agile connections with the entire organization, optimizing processes and increasing purchasing efficiency.
Purchasing 4.0 raises the sector’s value proposition
According to the German Henrik von Scheel, creator of the expression and fundamentals of Industry 4.0, we entered the second wave of Industry 4.0, characterized by the connection between advanced technologies and the use that humans can make of them, aiming at the improvement of organizational processes.
The purchasing sector has the opportunity to take advantage of this phase to increase its value proposition within the company, uniting its strategic knowledge about the market and its wide experience in purchasing with the opportunities brought by technological transformation.
This is the case, for example, with the use of bots. Considered a kind of assistant with Artificial Intelligence, it can provide updated information on purchasing processes and also generate automated demand. Through sensors placed in the stocked materials (making use of systems based on intelligence of things, IoT), the bot can identify the decrease in the stock of products and issue, autonomously, the purchase order before the item finishes and interferes in the organizational routine.
One of the great advantages of bots is that they can be implemented quickly, with little change in the process already used. That doesn’t eliminate the need for constant monitoring, by a properly trained professional, to ensure control over the resource – IT specialists recommend that the monitoring takes place on a daily basis, to ensure that the bots are running, and that there is a deeper performance assessment, on a monthly basis and whenever system changes occur.
Bots are already a reality in organizations, providing vendor management, purchase order creation, order and payment processing. But there is much to explore in this resource, and it is important that organizations reflect on operational details and impacts before the bots are deployed in the area.
In our blog, we’ve already covered other technologies that are influencing purchasing in Industry 4.0. Therefore, to complement your knowledge on the subject, we recommend reading from:
Soluparts can also collaborate for greater efficiency in the purchasing area, offering benefits such as better prices and agility to its customers. Get to know Soluparts differentials and values and take the opportunity to quote with our experts.
Have you ever heard of Strategic Sourcing? This concept has become very widespread among professionals in the purchasing area and in the business environment.
Basically, this methodology intends to analyze the total cost for the aquisition of products or services through observation, mapping and analysis of the specifications of materials, service levels and suppliers.
Read down below so you can understand a little more about Strategic Sourcing and how it helps you to have a more strategic purchasing process.
What is Strategic Sourcing after all?
Issues such as political and economic volatility, technological transformation, among other factors, make the market increasingly competitive. For this reason, it is essential to adopt effective sourcing processes to maximize business performance and efficiency, which helps you stand out from the competition.
Directly linked to the financial health of a business, this strategy is based on evaluating all angles of the acquisition of a material or product, by identifying the impact generated on the organization’s finances. This method starts from the premise that even if the purchase is made to meet the needs of an industry, it is part of the overall strategy of the business.
The use of Strategic Sourcing allows a thorough analysis of all external and internal costs that influence the value of the end products – among them: logistics, storage and procurement. In this way, it is possible to obtain, among other advantages:
- Cost reduction in purchased products and services;
- Improvement in the delivery time of suppliers;
- Improvement of the negotiation capacity with suppliers and speeding up the acquisition flow.
- Standardization of processes according to the formalization of routines, which are now documented;
- Greater knowledge of the supplier market;
- Rationalization of the supplier base;
- Improvement in the internal and external relationship of the organizations’ purchasing department.
In a practical way, with Strategic Sourcing, purchasing organizations can stop focusing only on transactional aspects of purchasing, incorporating greater intelligence into the process as a whole, including the choice of suppliers.
This avoids problems such as buying the same category of materials/products from different suppliers, paying different amounts – which is not good for organizational costs.
How to incorporate Strategic Sourcing
Given the importance of strategy, the consulting firm AT Kearney developed and popularized seven steps in the Sourcing process:
1. Analysis of the product categories used by the business, spending patterns and processes and departments involved
Identifying areas of spending by categorizing them because of their criticality – this categorization will help prioritize the purchasing process. If necessary, other categorization criteria can be created (direct or indirect, international or domestic expenditures, for example).
2. Development of a strategy based on business objectives
The strategy must be based on the objectives of the company, establishing a communication flow in which all those interested in procurement have visibility into the purchasing process as a whole.
3. Market evaluation and creation of a supplier portfolio
In-depth analysis of current and future suppliers, checking their market position and assessing the risks and opportunities they offer.
4. Preparation and formalization of documents for proposal request
Inform suppliers, of expected performance expectations, in addition to the desired material data, allowing them to have a clear understanding of what the organization needs. After these arrangements, which must be repeated with each of the suppliers, the only thing left for you to do is wait for their offer and only then select the ideal supplier.
In fact, this process can be optimized by hiring a company specialized in spare parts, which is responsible for the quotation with the main suppliers in the world and which, among other advantages, still offers the manufacturer’s warranty- see the article and discover the practicality of this type of service.
5. Negotiation with selected suppliers based on careful analysis
It aims to get the best possible deal for the company. This is a very important and detailed step, so we suggest reading the article: Advanced Negotiation: prepare yourself for great results
6. Choice of suppliers and agreements signed
This is the bureaucratic step in which documents and contracts are written, that is, it represents the end of the purchasing process. But be aware: Strategic Sourcing does not end here, since the relationship with suppliers is constant, especially when they are responsible for delivering strategic resource to the organization.
7. Performance monitoring and supply plan optimization when needed
Effectively measuring supplier performance against the organization’s requirements and objectives is an ongoing job that will help you understand risks and plan strategies to minimize possible supply chain disruptions.
Among the forms of monitoring, it is possible to adopt the QBR (Quartely Business Review) technique, which, as the name says, consists of talking quarterly with the main suppliers of the company and discuss topics such as cost reduction and improvement of service.
Doing a satisfaction and quality control survey with the departments that requested the services of the purchasing sector is a good way to collect other data and evaluate the performance of suppliers, as well as identify whether the contract is being fulfilled. This data will be very useful for the QBR meeting and also for directing improvements and seeking the best solutions to anticipate and/or solve problems.
Making a detailed analysis of your suppliers using the Strategic Sourcing matrix (below) is another way to track supplier performance.
Strategic Sourcing Matrix
After the 7 steps of Strategic Sourcing we recommend the formation of the so-called strategic sourcing matrix – download here our spreadsheet that will help you design your matrix!
It is basically a chart divided internally into 4 quadrants – see the model below:
We have prepared a Matrix model to help you map your suppliers! To download the material click here!
Analyzing the Criticality/Business Impact axis, we will see at the top the items of greater financial weight for the company, representing greater strategic importance for the business. At the bottom, we have the items with less financial weight and less relevance to the company.
Difficulty in Obtaining/Complexity of Market is the axis where, on the right, we have the materials inserted in a more complex market (few suppliers, influenced prices, monopolies, cartels, etc). On the left side, we see the products or services that are in a more competitive market, with several suppliers fighting for supply contracts.
Positioning each product on a chart like this helps purchasing professionals to have a broader view of the company’s needs and their respective financial impacts on the business.
Don’t forget to access here the material we prepared to help you with supplier mapping!
Therefore, the implementation of Strategic Sourcing in an organization requires collaboration and awareness of the importance of data collection. In addition to technology management, operational intelligence is required – see the article Essential skills for the 4.0 purchasing manager – and the use of platforms and systems, such as Business Intelligence, for example.
Take the opportunity to try Soluparts’ services, a specialist in indirect material procurement, that counts on the world’s leading suppliers. We negotiate the best prices and payment conditions to optimize your company’s purchasing process: request a quote with Soluparts!
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